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United States v. Krilich

ELR Citation: 27 ELR 20663
Nos. No. 92 C 5354, 948 F. Supp. 719/(N.D. Ill., 05/31/1996, 08/27/1996)

The court holds that the United States may enforce a consent decree that settled allegations against landowners for filling wetlands in violation of the Federal Water Pollution Control Act (FWPCA). The decree provided that an isolated wetland on the landowners' property would be excluded from the decree's requirements unless the Seventh Circuit's decision that the U.S. Environmental Protection Agency's isolated-wetlands regulation is invalid under the FWPCA and the Commerce Clause of the U.S. Constitution opinion was reversed. On rehearing, the Seventh Circuit vacated its prior opinion and held that the administrative finding that the landowners' isolated wetland was suitable habitat for migratory birds was not supported by substantial evidence. Thus, the Seventh Circuit found it unnecessary to consider whether the isolated-wetlands regulation was consistent with the FWPCA or within the limits of the Commerce Clause.

The court first holds that "reversed" should be understood as "reaching a contrary position." Although the vacating of a decision is sometimes understood to be a reversal, this is not what happened when the Seventh Circuit vacated its prior opinion. It did not impose a penalty against the landowners for filling isolated wetlands, it simply left the decision for another day. Thus, the court holds that under the decree, the isolated wetland was not a water of the United States subject to the requirements of the decree or the decree's penalty provisions for discharging fill without a permit.

The court then holds that two deadlines in the decree's mitigation plan were not modified by the parties' course of dealing or waived by the government's conduct in acquiescing to some changes in the mitigation plan. The landowners do not contend that there is any evidence that the government acquiesced in the extension of any deadlines, only that it acquiesced in changing the mitigation plan. Moreover, it is undisputed that the government repeatedly took the position that the deadlines had not been satisfied and that a penalty was due. The court next rejects the landowners' argument that the decree's stipulated penalties are unenforceable because they are unconscionably high or that they should be reduced in light of the actual violation. It would not be unconscionable to have a provision that imposes a penalty, because the parties were not seeking to liquidate damages, but instead were reaching a compromise regarding possible statutory penalties. And even if there was a rule that any "liquidated penalties" contained in a consent decree must be a reasonable estimate of possible penalties to be imposed, the $2,500 per day penalty would not be unenforceable, because it is only one-tenth of the FWPCA's maximum penalty of $25,000 per day. Further, the landowners do not point to evidence supporting their argument that the decree's $2,500 per day penalty provision is unreasonably excessive. The court thus holds the landowners jointly and severally liable for a penalty of $1,307,500 for missing the mitigation plan's deadlines by 523 days.

Counsel for Plaintiff
James J. Kubik, Ass't U.S. Attorney
U.S. Attorney's Office
Everett M. Dirksen Bldg.
219 S. Dearborn St., 5th Fl., Chicago IL 60604
(312) 353-5300

Counsel for Defendants
Raymond T. Reott
Jenner & Block
One IBM Plaza, Chicago IL 60611
(312) 222-9350